In this day and age, one MUST be very, very careful which small/indy publishing house you sign to. With new technology making it easier for self publishing, so too does it make it easier for would-be publishers with no real experience to start up publishing houses. Many of these people have never taken a course on how to publish, or even how to edit. Many of these people are self published individuals who have decided to take it upon themselves to do 'it' for others.
Some warning signs one MUST be aware of when looking at small/indy publishing houses is:
1) How they present themselves. I'm not saying their websites have to look like any of the 6 Sisters and their imprints, but it should look professional in accordance to their branding. This also means spelling and grammar errors.
2) How they correspond to potential authors and readers. If the publisher can't compose an email with proper grammar and spelling, then how can you be sure your novel/short story will be properly edited?
3) Ask FIRST about the editing process if offered a contract. If they have a professional editor, with credentials, editing your book, then that's a good sign. There are different stages of editing and one round is never enough. I know one author, who had to go back to substantive edits with his Large house publisher TEN times for rewrites.
4) That they aren't signing authors left, right and centre, and putting those books out in a matter of 6 months or less. There are reasons why it takes a year to 18 months (on average) to get a book out, unless you're going with Harlequin. If they are delivering quantity over quality for the number of staff, you know it'll be a poor product.
5) BEFORE you submit to a small/indy house, read something they've already put out. If you find substantive errors in the book, that's a BIG red flag, even if they say the book has been edited numerous times. If you find tense shifts, again, they should not be there at all. If you find consistent and numerous grammar and spelling errors, there's another red flag.
I hope this helped.